Catalysts That Ended Prior Bull Markets

The current bull market is only months away from becoming the longest in modern history, in fact if the market holds together through to September 2018, we will have crossed that mark. As we approach this “milestone” we thought it would be useful to reflect on the some of the other 11 bull markets that have occurred since WWII, paying particular attention to 6 of them, and importantly what was perceived to have caused their demise.

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To Beer Or Not To Beer

Part of helping manage a portfolio of global stocks involves staying on top of global trends, and determining whether there are ways to profit from any themes that emerge (either on the long or short side). One interesting theme the global team has observed is how Americans are increasingly drinking alcoholic beverages other than beer.

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Owning Mobile Payments In Asia

When navigating global equity markets, it helps to align one’s sails to the major tailwinds of growth. We have written about the advantages of investing with tailwinds on numerous occasions in the past (most notably here), and in summary: businesses in industries that are growing naturally will typically find it much easier to grow revenues, expand profit margins and ultimately earn higher returns on capital investment.

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Westpac Takes On The Wealth Management Upstarts

What happens when pesky, disruptive upstarts take on the big incumbents in an industry? More often than not, they find themselves in a battle royale over market share. And that’s just what’s happening in the wealth management industry, where Westpac is fighting back against the likes of Netwealth, HUB24 and Praemium.

This battle provides a very interesting example of competitive forces at work and things to look out for when considering an investment in very fast-growing companies.

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Why Ronaldo Might Be Worthless

Last week Italy’s most successful football club, Juventus, announced a deal for one of the world’s greatest players, Cristiano Ronaldo. The price tag that Ronaldo’s former club Real Madrid pinned to the Portuguese superstar? €100 million. But after a quick look at the economics of soccer it becomes clear that Ronaldo might be worth nothing at all.

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Amazon Prime Day: Pay To Play?

Today, Australian shoppers are participating in one of the largest shopping events in the world – Amazon Prime Day. Whether the event can help restore Australians’ faith in the Amazon brand remains to be seen, but what we can say for certain is that Prime Day will be as lucrative for Amazon’s nascent advertising business as it is for its retail business.

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A Brand New World

If you want exposure to the best and biggest brands across all sectors then you need to invest globally. With data from Forbes and imagery courtesy of Visual Capitalist, today’s fun chart below shows the world’s 100 most valuable brands, worth over $2 trillion in aggregate.

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U.S. Pharmacy Retailers, Mauled By The Amazon

In this increasingly connected world where any product is available at any time through an online offering rather than a traditional brick-and mortar store, it seems impossible to think there could be a $270 billion industry that has bucked the trend and gone the other way.

The U.S. pharmacy industry however has done just this, with online (including mail-order) prescriptions undergoing a staggering 33 per cent decrease in market share, falling from 16 per cent of the market in 2009 to just 12 per cent in 2017, with brick-and-mortar taking the difference. Meanwhile in general retail (apparel, shoes, electronics, etc) the trend has been the diametric opposite, with online having increased its market share by ~250 per cent over the same period.

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Why Two Is Better Than One

Imagine you had a jar of jelly beans and you asked a large group of people to write down their estimate for the quantity of beans in the jar. What you would find is that, upon taking the average of everyone’s guesses, you arrive at a remarkably accurate estimate. Often, the accuracy of the average is higher than any individual estimate. How is this so?

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How Do You Limit Your Downside?

We recently met Frank and Vanessa, two hypothetical investors in global equities but with very different performance over a two-decade time frame. Frank turned a million dollars into $4 million, but in the same time Vanessa’s account grew to $11 million – all by avoiding the handful of down years in global equity markets from 1997 to 2017. So how can you limit the downturns when investing in global equities?

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Is China Winning The Global Technology Race?

In round one of what appears to be a deepening trade war between China and the US, the battle is on artificial intelligence, quantum computing, 5G wireless applications and genomics. President Trump has unveiled 25 per cent tariffs on $50 billion of Chinese imports and has also asked the US Trade Representative to identify an additional $200 billion worth of Chinese goods for tariffs of 10 per cent. 

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Search For Yield & The Ballooning Bond Market

The size of the corporate bond market has grown extraordinarily subsequent to the 2008 / 2009 financial crisis, adding ~$4.5 trillion worth of Investment Grade (BBB rated and above) and High Yield debt (BB rated and below) representing an increase of ~150%. Of particular note is the split between BBB (lowest rated Investment Grade debt) and High Yield (junk rated debt). From the chart below it is clear to see there has been an explosion in BBB paper (Investment Grade) largely driven by unprecedented stimulus from central banks, falling credit standards by rating agencies and the market’s relentless search for yield.

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